The new reformed bankruptcy law

Thelaw of August 11, 2017 introduces some innovations inbankruptcylawwith the dual objective of better protecting third parties from failing companies and allowing those in temporary difficulty to recover better. What are the main changes that this law, which came into force on1 May 2018, will make to the procedure as we know it?      

Extension of the scope of the bankruptcy

Previously reserved for merchants or commercial companies, thenew lawnow makes it possible to pursue bankruptcy:

• Anynatural person pursuing a professional activity as a self-employed person, including the independent professions;
• Alllegal personsexcluding those under public law (specified in the law) and financial sector institutions (which are not covered by a judicial reorganization procedure);
• Anyorganization without legal personality distributing, de jure or de facto, benefits to its members or to its de jure or de facto officers (ex.: Union).

Thisreformmakes it possible to introduce non-profit associations, liberal professions and the self-employed, and de facto associations in order to correspond to the new economic reality of our society.

Deletion replaces excusability

From now on, if thebankrupthas not committed a serious and gross fault, he can benefit from “erasure”: he will be released from his liabilities and held to be rehabilitated. Whereas before thebankrupt’s excusabilitymade it possible to suspend the execution of his debts without erasing them, the new law completely erases them. This innovation is supported by a “second chance” objective granted to thebankruptthat will allow him to rebound more quickly. However, this objective misses its target because the new text contains many possible remedies against erasure which would have much more serious consequences, in the case of a refusal on the part of the judge, than under the system of excusability.

Out-of-court settlements

The new text favors this type of agreement between the parties and will even allow the judge to formalize this agreement later within a judgment.

The establishment of a new tribunal

As of1 November 2018, theCommercial Courtwill be replaced by the “Company Court” inbankruptcyproceedings. This novelty does not come from the law of 11 August 2017, but from the Law of April 15, 2018 reforming company law. We wanted to point that out in this article.

The active estate of the bankruptcy

The law now provides that assets acquired during bankruptcy are no longer part of the estate. This includes, for example, donations received or income from work performed after the opening of bankruptcy. This law also announced the entry into force of theCentral Solvency Register(RegSol). This platform now provides creditors with a clearer view of their current files and facilitates the filing of claims.

Thelaw of August 11, 2017 introduces some innovations inbankruptcylawwith the dual objective of better protecting third parties from failing companies and allowing those in temporary difficulty to recover better. What are the main changes that this law, which came into force on1 May 2018, will make to the procedure as we know it?      

Extension of the scope of the bankruptcy

Previously reserved for merchants or commercial companies, thenew lawnow makes it possible to pursue bankruptcy:

• Anynatural person pursuing a professional activity as a self-employed person, including the independent professions;
• Alllegal personsexcluding those under public law (specified in the law) and financial sector institutions (which are not covered by a judicial reorganization procedure);
• Anyorganization without legal personality distributing, de jure or de facto, benefits to its members or to its de jure or de facto officers (ex.: Union).

Thisreformmakes it possible to introduce non-profit associations, liberal professions and the self-employed, and de facto associations in order to correspond to the new economic reality of our society.

Deletion replaces excusability

From now on, if thebankrupthas not committed a serious and gross fault, he can benefit from “erasure”: he will be released from his liabilities and held to be rehabilitated. Whereas before thebankrupt’s excusabilitymade it possible to suspend the execution of his debts without erasing them, the new law completely erases them. This innovation is supported by a “second chance” objective granted to thebankruptthat will allow him to rebound more quickly. However, this objective misses its target because the new text contains many possible remedies against erasure which would have much more serious consequences, in the case of a refusal on the part of the judge, than under the system of excusability.

Out-of-court settlements

The new text favors this type of agreement between the parties and will even allow the judge to formalize this agreement later within a judgment.

The establishment of a new tribunal

As of1 November 2018, theCommercial Courtwill be replaced by the “Company Court” inbankruptcyproceedings. This novelty does not come from the law of 11 August 2017, but from the Law of April 15, 2018 reforming company law. We wanted to point that out in this article.

The active estate of the bankruptcy

The law now provides that assets acquired during bankruptcy are no longer part of the estate. This includes, for example, donations received or income from work performed after the opening of bankruptcy. This law also announced the entry into force of theCentral Solvency Register(RegSol). This platform now provides creditors with a clearer view of their current files and facilitates the filing of claims.